Legal claims defining the scope of protection. Each claim is shown in both the original legal language and a plain English translation.
1. A method comprising: receiving, via a processor on an electronic exchange from a first market maker, a first order for a financial instrument, in which the first market maker is located on a device that is remote to the electronic exchange; after a delay, receiving, via the processor on the electronic exchange from a second market maker, a second order that matches the first order, in which the delay is due to a latency within the electronic exchange, in which the second market maker is located on a device that is remote to the exchange; in response to receiving the second order that matches the first order, automatically adjusting, via the processor, a price of the first order based on a set of rules, in which the set of rules is determined in advance of the electronic exchange receiving any orders, in which the first market maker and the second market maker are in electronic communication with the processor over a network.
An electronic trading exchange receives a financial instrument order from a first market maker (located remotely). After a delay caused by latency within the exchange, a matching order is received from a second remote market maker. The exchange automatically adjusts the price of the first market maker's order based on pre-defined rules to avoid a trade. Both market makers communicate electronically with the exchange's processor over a network.
2. The method of claim 1 , in which the set of rules further comprises: determining that the second order offering a bid price that is higher than or equal to an offer price of the first order; and in response to the determination, triggering a command to prevent a match between the first order and the second order.
Building on the electronic trading exchange concept: The pre-defined rules include checking if the second market maker's bid price is higher than or equal to the first market maker's offer price. If this is true, the system triggers a command to prevent a match between the two orders, avoiding an immediate trade based on stale pricing information.
3. The method of claim 2 , in which the command to prevent the match between the first order and the second order comprises: increasing the offer price of the first order to exceed the bid price of the second order.
Expanding on preventing trades: The "prevent match" command specifically involves increasing the first market maker's offer price so that it exceeds the second market maker's bid price. This ensures no trade occurs at the potentially inaccurate prices caused by the exchange's latency.
4. The method of claim 1 , in which the set of rules further comprises: determining that the delay has caused the price of the first order and a price of the second order no longer be accurate; and in response to the determination, triggering a command to prevent a match between the first order and the second order.
Expanding on pre-defined rules: If the delay within the electronic exchange has rendered the prices of the first and second orders inaccurate, a rule triggers a command to prevent a match between them. This avoids trades at outdated or incorrect price points.
5. The method of claim 1 , in which the set of rules further comprises: determining that the second order has an offer price that is lower than or equal to a bid price of the first order; and in response to the determination, triggering a command to prevent a match between the first order and the second order.
Expanding on pre-defined rules: If the second market maker's offer price is lower than or equal to the first market maker's bid price, a rule triggers a command to prevent a match between them. This avoids trades at outdated or incorrect price points when offers are too low relative to existing bids.
6. The method of claim 5 , in which the command to prevent the match between the first order and the second order comprises: decreasing the bid price of the first order to be lower than the offer price of the second order.
Expanding on preventing trades when offers are too low: The "prevent match" command involves decreasing the first market maker's bid price so it is lower than the second market maker's offer price, thus preventing a trade based on potentially stale or incorrect price information.
7. The method of claim 1 , in which the set of rules further comprises: determining that the second market maker belongs to a category of market makers that are to be avoided; and in response to the determination, triggering a command to prevent a match between the first order and the second order.
Expanding on pre-defined rules: If the second market maker belongs to a category of market makers that should be avoided (as predetermined in a configuration setting), a rule triggers a command to prevent a match between the first order and the second order. This allows filtering out specific types of market participants.
8. The method of claim 7 , in which the category comprises electronic feeds.
Defining the category of market makers to avoid: The "category of market makers to avoid" includes automated electronic feeds, which might be sources of problematic or undesirable order flow.
9. The method of claim 1 further comprising: receiving, from a third market maker, a third order that matches the first order.
Expanding the process: The electronic trading exchange also receives a third order from a third market maker that matches the first order. This introduces the possibility of executing a trade with someone other than the delayed second market maker.
10. The method of 9 further comprising: determining that the third market maker belongs to a category in which a match is permissible; and in response to the determination, triggering a command to execute a trade between the first order and the third order.
Continuing the trading process: The system determines if the third market maker belongs to a permissible category. If the third market maker is in the allowed category, the system executes a trade between the first order and the third order.
11. The method of claim 10 , in which the category comprises human traders.
Defining the category of permitted market makers: The "permissible category" includes human traders, as opposed to automated systems, suggesting a preference for manual market participation for order execution.
12. The method of claim 9 further comprising: in response to receiving the third order, triggering a timer to begin, in which the timer expires after a period of time that has been determined in advance of the electronic exchange receiving any orders; and receiving, before the period of time has expired, a request from the first market maker to adjust the price of the first order in order to avoid executing a trade between the first order and the third order.
Elaborating on the third market maker scenario: Upon receiving the third order, a timer starts. If, before the timer expires, the first market maker requests to adjust the price to avoid trading with the third market maker, the price is adjusted. This gives the original market maker a chance to respond before a trade executes with the new order.
13. An apparatus comprising: a processor on an electronic exchange; and a memory, in which the memory stores instructions which, when executed by the processor, direct the processor to: receive, from a first market maker, a first order for a financial instrument, in which the first market maker is located on a device that is remote to the electronic exchange; after a delay, receiving, from a second market maker, a second order that matches the first order, in which the delay is due to a latency within the electronic exchange, in which the second market maker is located on a device that is remote to the exchange; in response to receiving the second order that matches the first order, automatically adjust a price of the first order based on a set of rules, in which the set of rules is determined in advance of the electronic exchange receiving any orders, in which the first market maker and the second market maker are in electronic communication with the processor over a network.
An electronic trading exchange apparatus includes a processor and memory. The memory stores instructions to: receive a financial instrument order from a first (remote) market maker, then a matching order from a second (remote) market maker after a latency delay. The processor then automatically adjusts the first market maker's order price based on pre-defined rules to avoid trades based on stale data. Both market makers are in communication with the processor.
14. The apparatus of claim 13 , in which the set of rules further comprises: the memory storing instructions which, when executed by the processor, direct the processor to: determine that the second order offering a bid price that is higher than or equal to an offer price of the first order; and in response to the determination, trigger a command to prevent a match between the first order and the second order.
Expanding the apparatus: The pre-defined rules in memory include instructions to determine if the second market maker's bid price is higher than or equal to the first market maker's offer price. If true, the system triggers a command to prevent a match between those two orders to avoid an immediate trade on old price information.
15. The apparatus of claim 14 , in which the command to prevent the match between the first order and the second order comprises: the memory storing instructions which, when executed by the processor, direct the processor to: increase the offer price of the first order to exceed the bid price of the second order.
Expanding the apparatus's "prevent match" command: The instructions in memory to "prevent the match" specifically increase the first market maker's offer price so it exceeds the second market maker's bid price, thus avoiding trades based on the latency-affected prices.
16. The apparatus of claim 13 , in which the set of rules further comprises: the memory storing instructions which, when executed by the processor, direct the processor to: determine that the delay has caused the price of the first order and a price of the second order no longer be accurate; and in response to the determination, trigger a command to prevent a match between the first order and the second order.
Expanding the apparatus's rules: The instructions in memory include checking if the delay has rendered the first and second orders' prices inaccurate. If so, a command is triggered to prevent a match, ensuring no trades occur at potentially stale prices.
17. The apparatus of claim 13 , in which the set of rules further comprises: the memory storing instructions which, when executed by the processor, direct the processor to: determine that the second order has an offer price that is lower than or equal to a bid price of the first order; and in response to the determination, trigger a command to prevent a match between the first order and the second order.
Expanding the apparatus's rules: Instructions are in memory to check if the second market maker's offer price is lower than or equal to the first market maker's bid price. If true, a command is triggered to prevent a match between them, avoiding trades at unfavorable prices for the first market maker.
18. The apparatus of claim 17 , in which the command to prevent the match between the first order and the second order comprises: the memory storing instructions which, when executed by the processor, direct the processor to: decrease the bid price of the first order to be lower than the offer price of the second order.
Expanding the apparatus's "prevent match" command (offer too low): The memory stores instructions to decrease the first market maker's bid price so it is lower than the second market maker's offer price. This avoids the trade based on the stale or incorrect price.
19. The apparatus of claim 13 , in which the set of rules further comprises: the memory storing instructions which, when executed by the processor, direct the processor to: determine that the second market maker belongs to a category of market makers that are to be avoided; and in response to the determination, trigger a command to prevent a match between the first order and the second order.
Expanding the apparatus's rules: Instructions in memory dictate checking if the second market maker belongs to a category to be avoided. If so, a command prevents a match between the first and second orders, based on pre-configured preferences to filter undesired market participants.
20. The apparatus of claim 19 , in which the category comprises electronic feeds.
Specifying apparatus's avoid category: The "category of market makers to avoid" in memory's instructions includes automated electronic feeds, indicating a preference to exclude orders originating from automated or algorithmic sources.
21. The apparatus of claim 13 , in which the memory further stores instructions which, when executed by the processor, direct the processor to: receive, from a third market maker, a third order that matches the first order.
Expanding apparatus's functionality: The memory further stores instructions to receive a third order from a third market maker that matches the first order, setting the stage for potentially executing a trade.
22. The apparatus of 21 , in which the memory further stores instructions which, when executed by the processor, direct the processor to: determine that the third market maker belongs to a category in which a match is permissible; and in response to the determination, trigger a command to execute a trade between the first order and the third order.
Continuing apparatus trading process: Instructions in memory determine if the third market maker belongs to a permitted category. If so, a command triggers a trade between the first order and the third order, allowing trades with specific market participants.
23. The apparatus of claim 22 , in which the category comprises human traders.
Defining apparatus's allowed market maker category: The "permissible category" stored in memory includes human traders, suggesting a preference for manual market interactions versus automated systems when executing trades.
24. The apparatus of claim 21 , in which the memory further stores instructions which, when executed by the processor, direct the processor to: in response to receiving the third order, trigger a timer to begin, in which the timer expires after a period of time that has been determined in advance of the electronic exchange receiving any orders; and receive, before the period of time has expired, a request from the first market maker to adjust the price of the first order in order to avoid executing a trade between the first order and the third order.
Elaboration on apparatus third market maker scenario: Upon receiving the third order, the memory triggers a timer to begin, the timer's end has been determined in advance. Instructions include receiving a request from the first market maker (before the timer expires) to adjust the price and avoid a trade with the third party.
25. An article of manufacture comprising: a computer-readable medium, in which the computer-readable medium is non-transitory and stores instructions which, when executed by a processor, direct the processor to: receive, from a first market maker, a first order for a financial instrument, in which the first market maker is located on a device that is remote to the electronic exchange; after a delay, receiving, from a second market maker, a second order that matches the first order, in which the delay is due to a latency within the electronic exchange, in which the second market maker is located on a device that is remote to the exchange; in response to receiving the second order that matches the first order, automatically adjust a price of the first order based on a set of rules, in which the set of rules is determined in advance of the electronic exchange receiving any orders, in which the first market maker and the second market maker are in electronic communication with the processor over a network.
A non-transitory computer-readable medium stores instructions to: receive a financial instrument order from a first (remote) market maker, then a matching order from a second (remote) market maker after a latency delay. Then automatically adjust the first market maker's order price based on pre-defined rules to avoid trades based on stale data. Both market makers communicate with the processor over a network.
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August 26, 2014
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